Egypt’s Financial Regulatory Authority (FRA) has issued an executive decision to allow certain companies to manage the funding of margin purchases of securities done by securities brokerage firms.
The decision will be applied to companies who are licensed to practice the management of investment funds.
The move aims to maximise the efficiency of the money market, and maintain transparency in the mechanisms of dealing with activities specialised in securities.
It follows the approval of the decision given by the FRA’s Board of Directors at an online meeting on Saturday.
FRA Chairperson Mohamed Omran said that companies licensed to practice the management of investment funds must commit to contracting with securities brokerage companies that have obtained the authority’s approval to engage in securities margin purchasing.
The contract must specify the rights and obligations of each party, in addition to ways to avoid a conflict of interests.
Omran stressed that brokerage companies’ financing should be limited to the list of securities that meet the conditions and standards set by the Egyptian Exchange (EGX) and approved by the FRA.
The Authority’s records reveal that 64 companies have obtained a licence to practice investment funds management activities.
In February, the FRA allowed factoring companies to provide the service of future financial rights factoring to brokerage companies engaging in the activity of buying securities margin purchases.
This is provided that this gives brokerage companies new sources of financing that enables them to expand the activity, and further stimulate securities trading operations in EGX.